Forget all of that economic doom and gloom because that was so August! September has come and hope is rising. Maybe, just maybe, things were not as bad as it seemed and maybe having total petroleum supplies at all time highs really does not matter. You see in a world where the Fed always has your back it might be wise to not get too pessimistic. Remember the Fed has the printing press and they have promised to use it if needed.
Of course oil had other scares to worry about. An explosion and fire on a Mariner Energy platform had traders saying “Oh no, here we go again.” Mainer Energy, a former unit of Enron and now in the process of being bought by Apache, has had it shares of accidents racking up more than 12 in the last four years. Anytime you are dealing with oil and gas it is a potentially dangerous situation and accidents are going to happen. The fears that this accident would give the critics of off shore drilling more ammunition to keep the drilling moratorium going perhaps in a small way helped support prices.
What is really working in the favor of the drilling moratorium is ample supply. If supplies were tighter like they were just a few years ago the drilling moratorium might be adding 5 to 10 dollars to a barrel of oil. Now, in the short term, the price impact is negligible, yet if we saw retail prices for gasoline, natural gas and heating oil rising, Americans would scream loud enough to lift the ban. The impact is not being felt now but will be felt in the future especially if our economy ever comes back.
The other worry is the weather. This week traders tried to guess what impact the rash of tropical waves and hurricanes might have on price. So far Hurricane Earl is not as bad as it could have been, yet there are more storms looming. The AFP reported that, “Hurricane Earl pounded North Carolina on Friday as it sped up the U.S. East Coast, threatening dangerous waves and riptides across the eastern seaboard. Coastal residents huddled at home after tens of thousands fled the strongest Atlantic storm of 2010.” Does not sound like a lot of driving going on. The AFP further says that it was expected to produce major swells along much of the eastern seaboard during the day, send waters surging up to four feet (1.2 meters) and dump up to five inches (13 centimeters) of rain.
A huge swath of the East Coast was due for a lashing by tropical storm and hurricane force winds. Although Earl was earlier downgraded to a Category 2 hurricane, it was set to bring destructive winds and heavy rains to North Carolina's coast before moving north, reaching Canada's Nova Scotia by early Saturday. Weather watchers said Earl was the most powerful hurricane to threaten the U.S. Northeast and New England since 1991, when Hurricane Bob caused deadly damage.
For vacationers the forecast track ended plans for a final few care-free days at the beach before the end of summer for the Labor Day holiday weekend that draws millions to East Coast beaches. Millions will stay home, dramatically lowering the demand for gasoline. Earl and Fiona have hurt demand but the Atlantic is still very active.
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